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What Are Charities Learning from the WE Scandal?

Forget ‘charitainment.’ Be ultra-transparent. And more from non-profit experts. WE isn’t typical of the sector, they say.

Christopher Guly 14 Aug 2020 | TheTyee.ca

Tyee frequent contributor Christopher Guly is an Ottawa-based journalist and member of the Canadian Parliamentary Press Gallery.

In Ottawa, Canada’s 150th anniversary weekend festivities three years ago were memorable for rains that drenched the front lawn of Parliament Hill and the security checkpoints that left people stuck in hours-long lineups that stretched for blocks.

In hindsight, the dark clouds in the sky also forebode an unravelling of reputations for several of those who took to the stage, beneath the Peace Tower, on the Sunday for WE Day’s first outdoor celebration.

Jacob Hoggard, lead singer for the Canadian rock band, Hedley, had to literally be carried offstage, due to a thunderstorm crackling with lightning, during the finale.

Three years later, Hoggard awaits a trial, set to begin in Toronto on Jan. 4, where a jury will determine his fate regarding charges of sexual assault causing bodily harm and sexual interference laid against him two summers ago.

Prime Minister Justin Trudeau, along with his wife, Sophie Grégoire Trudeau, and his mother, Margaret, were among the speakers at that Canada Day weekend WE Day event, which also featured the WE organization’s co-founders Craig and Marc Kielburger.

It was a high-energy, crowd-filled day, with the sun even breaking through the clouded sky during the afternoon. And to put on the event, WE was paid $1.5 million in Canadian taxpayers’ money, according to the Conservatives.

Three years later, the Trudeau-Kielburger connection has proven a debacle for both sides — and its public relations poison may seep into the wider charitable sector, worry non-profit experts.

The lesson is stark: Charities that depend on “charitainment” by celebrities to woo supporters are playing a dangerous game for all involved. And charities that opt for complexly confusing business structures over transparency are ripe for accusations of self-dealing.

In 2015, the election of Justin Trudeau and his Liberals was met with a sigh of relief in many Canadian charities. The former Tory government under Stephen Harper had ordered the Canada Revenue Agency to conduct 52 political-activity audits of charities, ranging from the David Suzuki Foundation to Amnesty International. Pointing to the fact that most of those audited were charities with progressive and environmental leanings, critics charged Harper was waging political war.

Trudeau was seen as much more friendly to the role charities play in civil society. There are more than 170,000 charities and non-profit organizations in Canada, accounting for eight per cent of the nation’s GDP, by some estimates, taking on critical work not pursued by for-profit businesses or public agencies. Charities have a long history of working with governments wanting to outsource initiatives.

Charitable donations per person across Canada already were dropping, causing the organization Canada Helps to conclude in 2018, “Over the next decade we are set to see a significant portion of donations disappear.”

Then came the WE scandal, showing how big contracts quietly awarded to one charity with insider connections going straight to the top of government can raise questions about conflict of interest and corruption. (See sidebar for a summary of the WE scandal.)

The story is far from over, as the Angus Reid Institute discovered in a survey on the WE affair. Nearly three in four respondents “remain unconvinced they have all of the facts surrounding the scandal as they await the findings from an ongoing ethics investigation.”

The Tyee sought comment from the Kielburgers directly, but received no reply.

Others associated with the charitable sector view WE’s problems as a case study about donor diligence that was the focus of a recent webinar called “Beyond Good Intentions.”

To gauge what effect the WE imbroglio will have on the organization’s future and on the future of charitable giving in Canada, The Tyee spoke to two of the panellists: Mark Blumberg, a partner with the Toronto law firm, Blumberg Segal LLP, whose practice is devoted to representing non-profits and charities; and June Findlay, a Toronto-based social media strategist who focused her 2012 master’s thesis on WE Day’s communication strategies.

“I was hoping that after this scandal emerged that WE would provide a lot of transparency and make a lot of changes to move in a more positive direction, but so far we haven’t seen that sort of change,” said Blumberg.

“Because WE has significant assets,” he said, “even if all their corporate partners were to abandon them and all donors were to stop funding them, they would still have, according to their financial statements, very significant real estate and other assets.”

The National Post did a deep dive into WE Charity, the non-profit arm of the organization, and discovered that as of last August, it had $62.5 million in assets, $43 million of which is in the form of land and buildings. Its revenue for the 2019 fiscal year was $65.9 million.

The relationship between ME to WE Social Enterprises Inc., the private for-profit entity within the organization, and WE Charity is that ME to WE gives a minimum of 50 per cent and up to 90 per cent of its “annual profits” to WE Charity, according to Vanmala Subramaniam’s story.

An excerpt: “We have no idea whether ME to WE makes $2 million or $20 million. Whether it owns $12 million in real estate or $100 million in real estate through companies or entities associated with it. Whether the Kielburger brothers have a 51 per cent controlling interest or a 90 per cent controlling interest,” anonymously said one charity lawyer at a large Bay Street firm.

WE Charity posts some of its financial statements online and makes the point that 90 per cent of donations support its programming, with the remainder directed toward administrative costs.

582px version of Blumbergs-0928.jpg
Charities lawyer Mark Blumberg says transparency is paramount. ‘There are very clear expectations that if you have a for-profit and a charity working together, they have to be separate and that there isn’t confusion in the public’s mind… where the money is going.’ Photo: supplied.

Last week, WE Charity released further information in response to testimony provided by Charity Intelligence to the Commons finance committee. (Charity Intelligence has also issued a “donor advisory” regarding WE Charity given the extensive overhaul this year of the organization’s board of directors, which included the departure of its chair, Michelle Douglas.)

Blumberg describes WE as a labyrinthian organization. Douglas acknowledged as much during her appearance last month before the finance committee, when she said “that she didn’t even know how many different organizations” were part of WE.

That, said Blumberg, “is an indication that this is very abnormal, very complicated and doesn’t make that much sense as to why there is that much complexity. It’s also not clear to the public as to why.”

He expects that other charities will use WE’s situation as “a lesson that proactive transparency is very inexpensive compared to the consequences of not being transparent.”

Blumberg said his firm represents as many as 800 clients in the charitable sector, and runs a blog on Canadian charity law that notes there are 85,875 registered charities in the country.

He said that based on the latest available numbers, from the 2017 tax year, the sector employed more than two million people; earned nearly $280 billion and spent more than $261 billion.

Blumberg Segal has two other websites: Charity Data, which tracks the financial information of registered Canadian charities, and Smart Giving, which is designed to help Canadians find “good” charities and avoid scams.

“I am concerned that all of this negative publicity on WE may transpose, to some extent, on the charity sector without people knowing how unique WE is,” said Blumberg. “Most in the sector are not as involved with the political and can’t just call a cabinet minister.”

He said that CanadianCharityLaw.ca offers a $249 online course on when it makes sense for charities to set up corporations, and how to ensure transparency. “It has to be very separate and comply with the legal rules.”

“There are very clear expectations that if you have a for-profit and a charity working together, they have to be separate and that there isn’t confusion in the public’s mind as to which one is a charity and which is a for-profit, and where the money is going.”

kielburgers-trudeaus.jpg
Prime Minister Justin Trudeau and wife Sophie with Craig and Mark Kielburger at a WE event. ‘I am concerned that all of this negative publicity on WE may transpose, to some extent, on the charity sector without people knowing how unique WE is,’ says charity law expert Mark Blumberg. ‘Most in the sector are not as involved with the political and can’t just call a cabinet minister.’ Photo: Canadian Press.

The COVID-19 pandemic has put a halt to any further WE Days. But those events might have been scuttled by recent headlines, as well, as schools rethink participation.

Alberta school boards are reviewing their association with WE Charity, and the province’s government has cut ties with the organization.

The Toronto District School Board, Canada’s largest board, is also rethinking its connection to WE, while the Ontario government is ending its relationship with the organization and, according to Education Minister Stephen Lecce, is encouraging all of the province’s school boards to follow suit.

Regarding the future of WE, Blumberg speculated that another charity, “without the same reputational problems,” could assume control of its programming. “It’s also possible WE could do some significant governance changes, where many of the people who are currently in a position of leadership are not in the future, which would change the perception the public has of the organization.”

WE Charity could, he offered, also rebrand, which is how it ended up with its name four years ago. Previously, it was known as Free the Children, which was founded by Craig Kielburger when he was 12 years old.

“For more than a month, it has been difficult for the charity sector because a lot of focus has been on one organization,” said Blumberg. “But there are nearly 86,000 charities in Canada that are trying to respond to huge needs in our society.”

June Findlay worked for two of those charities as a digital marketing and branding specialist for both the YMCA of Greater Toronto and UNICEF Canada. In those roles, she brought an academic perspective obtained through her graduate research on how celebrity and spectacle are used to advocate for a charitable cause as in the case of WE Day.

Findlay’s thesis was entitled “Pomp and Circumstance: Communication Strategy, Charitainment and the Media Event in the Humanitarian Context,” and she relied on it as a backdrop to a scathing critique of WE’s approach in a Flare story. Findlay decided to examine WE Days, which debuted in Toronto in October 2007, as the first widespread Canadian example of what Time magazine writer James Poniwozik dubbed “charitainment” and what Findlay, in her Flare essay, described as a “phenomenon of celebrity culture mixed with selective activism that serves to promote a celebrity’s personal brand as much as it does the issue with which they’re associated.”

“At WE Day, celebrities — including the Kielburger brothers themselves — build their personal brands as compassionate superhumans who are out there saving the world,” she wrote.

WE’s star-studded, high-voltage approach to spotlighting a cause is lightyears away from the lower-key, aid-seeking commercials in the 1960s and 1970s featuring onetime journalist and lifelong humanitarian, Prague-born Lotta Hitschmanova, which popularized “56 Sparks Street, Ottawa” as the address for the Unitarian Service Committee of Canada. (That charity is now renamed SeedChange.)

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June Findlay is a branding specialist for charities. She critiqued the WE Day model, saying ‘celebrities — including the Kielburger brothers themselves — build their personal brands as compassionate superhumans who are out there saving the world.' Photo: supplied.

In researching her master’s thesis, Findlay looked at how charity initiatives have combined celebrity culture, humanitarian issues, philanthrocapitalism and slacktivism (such as believing that only adding a black square to a social-media feed fully supports the Black Lives Matter movement) to raise money and awareness of issues.

“In Canada, WE Day was the only event that fits the bill for all criteria,” explained Findlay, who never attended a WE Day, but who based her WE scholarly examination by watching YouTube videos of past events.

The evolution of the UN goodwill ambassador role provided a useful measuring tool to determine WE Day’s endgame, in her view.

“Audrey Hepburn vs. Angelina Jolie — two goodwill ambassadors for the United Nations — both well-known actresses, both ahead of their time in terms of how they identified as women,” explained Findlay, who currently works as a “brand conversation manager” with Hudson Rouge, an international marketing firm headquartered in New York.

“Audrey Hepburn used her celebrity to bring awareness to various plights of children around the world. Angelina Jolie did the same, but she also used it as a PR chit for her own brand as a humanitarian,” she said.

“At the start, I think the Kielburgers were genuine in their concern for children in different countries. Through WE Charity, they focus on sustainable development in Africa, Asia and South America, which is a good thing. But somewhere along the way, the celebrity and the fame and the money got to them and it became more of a business venture than a charity.”

“What WE has done is that it has marketed its brand so well that even if people don’t know what they do, they know who they are. It’s a master class in branding.” But Findlay believes WE has “taken a direct hit” to its brand.

Among those cutting ties are Virgin Atlantic Airways, the Royal Bank of Canada and the Globe and Mail.

WE is involved in more than 18,000 schools in Canada, the United States and the United Kingdom. Yet whether or not that number drops, WE Charity’s target audience remains kids — and the organization won’t need big WE Day gatherings to reach them, Findlay argues. “Most kids use social media, so you could go on TikTok or Instagram Live and do an event.”

But Findlay believes the WE controversy will serve as a “catalyst” to force charities to “rethink how they portray their message and whom they really intend to help. Because people have a really high bullshit meter.”

The pandemic means “people have lost their jobs or are on an even more limited income than before. So if they want to give, they definitely want to be aware of what the charity does, who is benefitting and how their money is spent,” she said.

In these difficult times, Findlay suggests charities could forge alliances to collaborate on raising money for a common objective from an increasingly cash-strapped donor base.

She also suggests swapping the celebrity-endorsement model for one that could also significantly reduce a charity’s costs.

“In social-media marketing, we have influencers,” explained Findlay. “You have the macro-influencers, like Angelina Jolie or Kim Kardashian, who can literally post anything and people will do what they say. But there are also micro-influencers, who might be a friend of a friend of yours, yet may have a large audience — and be more relatable than a Kim Kardashian.”

But Findlay stressed it would not be fair if the WE scandal tarnished Canada’s entire charitable sector.

“We just have to reassess how that good is being done and how it’s being done and for whose benefit.”  [Tyee]

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